Analytics, EU – Baltic States, Financial Services, Wages

International Internet Magazine. Baltic States news & analytics Tuesday, 16.04.2024, 06:24

European Wage Inflation

BC, Riga, 27.03.2019.Print version
With the drama of the U.K. parliament unfolding and changing by the hour, this week, DBRS has chosen a chart that highlights a positive development — at least for wage earners.



European wages have been increasing over the past year, as low employment levels have begun to put pressure on wages. Why is this important? Wage growth tends to feed inflation levels, which have remained extremely low since the global financial crisis. Inflation is the benchmark that the European Central Bank (ECB) watches and keeps under control with its monetary policy tools.  

An increase in wages should result in an increase in inflation, which will put pressure on the ECB to pull back on its quantitative easing. However, while wage increases signal potential inflation, there are plenty of negative headwinds currently on the horizon, as a number of European countries are showing signs of slowing growth.

Additionally, there is wide variation in the levels of wage inflation per country. Some countries, such as Malta (-0.4% wage decrease), Spain (1.2% wage increase), Italy (1.7%) and France (1.9%), have wage growth below 2.0%. On the other hand, several countries have regularly high growth over the year, which continued in the Q4 2018, including Romania (13.1%), Hungary (10.4%) and Latvia (10.2%). Other notable countries are the U.K. (3.4%), Germany (2.4%) and Netherlands (2.3%). These statistics represent year-over-year quarterly changes in wage and salary costs.






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